Microsoft's (MSFT) CapEx Growth Is Outpacing AI Gains
Microsoft of course is not the only cloud provider that has seen most of its AI growth come from 2 companies - Anthropic and OpenAI - both of which are losing billions in cash flow per year.
How much longer can the accelerated buildout of AI persist?
It can’t persist in perpetuity as Anthropic and OpenAI’s losses will continue to grow as those companies scale.
Microsoft can’t continue to live with the situation below. Amazon (AMZN), Google (GOOGL) and Oracle (ORCL) are in the same debt-supported boat. Look at MSFT’s FY’27 obligations. I wonder how many of those projects will be canceled?
Given the fragility of the situation, I suspect that at some point the hyperscalers will acquire both Anthropic and OpenAI. It is inevitable.
My guess is that prospective acquirers wish to see Anthropic and OpenAI valuations get hit first, which they will when we have revenue disclosure. Organic growth has to be slowing for both companies.
